[Aloha]

The single largest thing we can do is undo the changes to bankruptcy law signed in 2005, it removed bankruptcy as a tool of the poor to discharge excess debt. It's caused there to be very little downside to lending, and lead to an explosion of debt.

[1-more]

I'm begging on hands and knees for everyone in this thread to read Graeber's "Debt: the first 5,000 years." The notion that debts have to be paid is very odd. If I went to a bank and asked for a loan to bet on a horse, they'd laugh me out of the building. But if they knew that no matter what they could get the money back from me, they'd cut the check. That's where we are right now with non-dischargeable debts. Who holds risk for making loans is not an iron clad law of nature; it's a matter of political will that we have changed over time.

[inshadows]

I've read first two chapters and had to put it down. The first two chapters clearly outlines the agenda or "the side" of the author. Nothing wrong with that. Authors side is basically

debtor: good lender: bad

I have empathy for the horrific stories author shares, but my logic was seeking the obvious topic that never came (in those two chapters). What if lenders decided to not lend? Wouldn't that leave those poor souls in Madagascar in even worse position?

The book is propaganda.

[anitil]

I tried hard to read that book, but really struggled to get through it unfortunately. It seemed right down my alley but I couldn't get in to it. Might be time to dig it out and try again

[mannanj]

Would you recommend against the newest addition: Debt - Updated and Expanded: The First 5,000 Year or the 2012 release?

[barry-cotter]

Don’t read it. Save your brain for a book that isn’t riddled with so many errors Brad DeLong wrote ten articles on the errors in Chapter 11.

https://www.econlib.org/archives/2012/07/hummel_on_graeb.htm...

> I have read David Graeber’s Debt: The First 5000 Years thoroughly and despite Graeber’s readability, scholarship, and erudition, it is a very bad book. Its tone is much too polemical. More important, when it gets to the more recent history that I know well, it is riddled with errors and distortions. Beyond that, it suffers from serious conceptual confusions, and in his excellent critique, Robert Murphy has only scratched the surface.

https://www.bradford-delong.com/2012/02/gabriel-rosser-on-da...

>> How the poor debtors still sell their daughters, How in the drought men still grow fat « Code and Culture: At Unfogged there’s a review (and a very funny comments thread) pointing out that the following sentence contains six factual claims all of which are incorrect:

> Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages

The above is a quote from Debt about Apple.

Here is the index of posts about errors in Chapter 11.

https://www.bradford-delong.com/.services/blog/6a00e551f0800...

[cwhiz]

The outcome of that will be that lending standards go up substantially. Significantly higher interest rates and required collateral. The eventual end result is fewer people able to qualify to buy a car, buy a house, get a credit card, or go to college. These are significant drivers of economic activity.

It's hard to put the genie back in the bottle.

[Frondo]

Offering debt as a way to finance regular life activities like school and housing is also a good way to paper over the other, equally serious problems we currently have in the US, an explosion in the cost of school and housing, compared to what people earn.

If people didn't have debt as a way to access these things, there might be more energy for addressing the income inequality and lack of class mobility we have, that's being obscured by the access to debt.

[cwhiz]

Neither side is necessarily wrong here but we changed the law to address the problems you describe.

I see this as similar to the payday lending debate. Payday lenders aren’t creating demand, they are responding to it. What happens when we eradicate that form of lending? Most things start from good intentions.

[imtringued]

Those artificially low lending standards merely enabled loans that shouldn't exist.

[cwhiz]

This is true but we did it for a reason. Buying a car used to require 35% down, 12-24 month payments, and 10%+ interest.

The average price of a new car is around $30,000. What percentage of Americans can afford a $10,500 down payment and a $900 monthly payment? I’d guess less than 15% but it’s just a guess.

[djannzjkzxn]

People shouldn’t be tricked into taking on tens of thousands of dollars in depreciation by committing to many years of monthly payments. Yes this system is good for car manufacturers, but no I don’t think that’s worth how much it ruins the finances of a good chunk of the country.

[lainga]

The genie has been doing a Fred Astaire number in cleats on the head of the sensible-economic-growth genie since about 2005.

[bluGill]

It would be good thing in the long run. Yes there would be short trem pain, but we still should make they standards higher.

[ashtonkem]

Especially since excessive lending usually requires public spending to fix once it gets too bad.